RBI Urges Bank Boards to Strengthen Governance Amid Evolving Risks

RBI Governor Shaktikanta Das emphasizes the need for bank boards to proactively manage risks by monitoring their portfolios for over-concentration, addressing unethical practices and structuring incentives appropriately. In a time of evolving technological and economic challenges, he stresses the importance of strong governance and strategic foresight for ensuring sustainable growth.

In a decisive move, RBI Governor Shaktikanta Das called on bank boards to proactively monitor portfolios and curb unethical practices. He urged banks to identify areas of over-concentration and tighten internal governance to address potential risks.

Das emphasized the importance of assessing external factors, including regulatory changes and market trends, and urged boards to remain vigilant about operational risks, especially those related to IT outsourcing and third-party vendors. He also highlighted the necessity to properly structure incentives to avoid unethical behavior.

Addressing the Conference of Directors of Private Sector Banks, Das stressed that strong internal foundations are crucial in navigating the rapidly evolving technological landscape and that effective governance is pivotal for sustainable growth in the banking sector.

(With inputs from agencies.)